15 JUN 2020

Classifieds advertising revenue has declined. What’s next?

POSTED UNDER Classifieds Digital Goods Direct Carrier Billing Mobile Marketing Payments
image of Jaak Kalja

Jaak Kalja

DIGITAL MARKETING SPECIALIST

image for Classifieds advertising revenue has declined. What’s next?

The ongoing crisis hasn’t been great for classifieds companies relying on 3rd party advertising revenues. While long-term trends show mobile advertising spend rising, marketing budgets are one of the first cuts during an economic crisis. In a survey by ICMA, 45% of classifieds providers said advertising is the area with the biggest decrease in revenue.

However the recovery will look like, classifieds portals can take specific steps to strengthen their position and become less dependent on advertising.

Adjusting to a mobile first strategy

Smartphone ownership has grown from 2.5 billion to 3.5 billion in only 4 years, according to Statista. This means 200 million additional people get a smartphone each year. In 5 years, 75% of all people are estimated to use only their smartphone to access the internet.

For advertisers, mobile web consumption creates a problem. On average, there’s 3 times less advertising room in mobile devices. That means 3 times less advertising revenue per session. Increasing the space allocated to advertising on mobile can instead lead to a negative impact on the mobile user experience and drive users away, not increase revenue.

The other growing concern with mobile advertising is its efficiency. The Financial Times recently ran a study which included major advertisers Disney, Unilever, Nestlé, 8 global ad agencies, 5 demand-side platforms, 6 supply-side platforms and 12 publishers. The study concluded only 12% of the ad dollars spent were completely transparent, while the rest could not be traced from end to end.

This has two implications for classifieds portals. The long-term trend makes legitimate advertisers cautious of ramping up their ad spending. Low transparency of current ad solutions also means portals are not in control of the advertisements, which can again lead to negative user experiences.

Putting higher emphasis on mobile UX

Salesforce’s recent survey indicated 74% of people are likely to switch brands if the purchasing process too difficult. The “purchasing process” does not mean only the part of the journey where the user enters the checkout flow: it covers the whole journey from acquisition to becoming a loyal customer.

For a classifieds portal who wants to grow their revenue from listing fees and other value-added services, reviewing the advertising strategy from end-to-end is necessary. This can mean cutting down on advertising elsewhere on the website, but also removing ads from pages related to the purchasing process entirely. Another important aspect is reviewing the payment process.

Optimizing the payment setup to increase revenue

74% of new users are willing to switch to a competing service if the payment process is too complicated. What are the main friction points why people fail to complete their transactions?

Long and complicated checkout processes are one of the top reasons why people abandon payments. So what are some of the things that can be done to improve revenue leaking during the payment process? Here are 3 ideas.

Focus a great mobile UX: Having a mobile-responsive site is not enough. Google micro-moments research indicates that before a purchase decision is made, 88% of people do research on their phone. Making your mobile customer journey effortless should be a core focus, including simplifying the account creation process.

Going deep with payment conversion data: Baymard Institute’s survey indicates that technical and billing errors combined make up 71% of the reasons why people abandon shopping carts. Getting a total overview of the checkout process and understanding where users drop off is the first step improving the results.

Using alternative payment methods: classifieds offering premium listings and value-added services can improve the mobile user experience through alternative payment methods. Digital wallets, and carrier billing are two solutions that can be used for this. Our own work with OLX in Poland (case study below) shows 10% pay with carrier billing. These are not people who would’ve used other payment methods before: it’s new paying users and revenue.

Mobile users are here to stay. Mobile advertising reached $225 billion in 2020. And if used wisely, it’s a great source of revenue for classifieds sites. But as the current crisis has shown, it’s wise to spread your bets. Companies that put the customer’s needs first and create great user experiences tend to win over the long haul.

If you want to learn more on carrier billing and how OLX is using it to grow premium listings revenue, download the case study below by entering your contact details.

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